Celebrities Who Went Broke

While regular, hard-working Americans often struggle with their finances, it is harder to sympathize with celebrities who lose large amounts of wealth.

Celebrities often have loads of cash, so their financial difficulties provide cautionary tales about the dangers of excess spending and poor money management.

In fact, dissecting a celebrity bankruptcy may help non-celebrities make better financial decisions.

Celebrities Who Have Gone Broke

The list of celebrities who have gone broke reads like a "who's who" list of famous Americans. Here is a laundry list of celebrities who have lost their riches:

MC Hammer. The flamboyant musician earned $33 million in the early 1990s, but quickly blew all his cash, aided in part by his purchase of two private helicopters.

Michael Jackson. Though he never filed bankruptcy, The King of Pop had a well-documented struggle with debt. Sources say Jackson purchased ten robot dogs with artificial intelligence on a whim.

Kim Basinger. The actress allegedly paid $20 million to buy a small town in Georgia in 1989. Basinger's grand ambitions were thwarted when she filed for bankruptcy four years later.

Mark Twain. The creator of Tom Sawyer and Huckleberry Finn saw his finances float up the river when he invested in a series of misguided get-rich-quick schemes.

Mike Tyson. Tyson had to file for bankruptcy despite earning more than $300 million as a professional boxer.

Willie Nelson. The famous singer-songwriter filed bankruptcy after receiving a bill from the Internal Revenue Service topping $16 million for unpaid taxes.

Walt Disney. Before he created the eponymous entertainment company, Disney had a few failed business ventures, forcing him to file bankruptcy in 1923.

While the list of celebrities who have filed bankruptcy is a striking example of the dangers of excess spending, it also reveals the potential healing effects of bankruptcy.

Figures such as Disney, Nelson, and Twain all went on to have successful careers after discharging their debts by filing bankruptcy.

Why Celebrities Go Broke

While each situation is different, some common themes run through celebrity bankruptcies. Common characteristics of celebrities who went broke include:

Excess spending

Relying too much on credit

Poor money management

Tax fraud

Failing to set strict monthly budgets

In an economy that depends on the easy availability of credit, making financial mistakes that create huge amounts of debt is easier than it has ever been. Fortunately, though, bankruptcy is also designed for people who haven't appeared on the cover of People.

If you are struggling with debt, you may be able to discharge some or all of your debts through personal bankruptcy.

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